Robust power generation and an effective delivery model determine the bullish economic growth of a country. A weak power infrastructure impedes the growth potential and pulls back the growth initiatives. Indias per capita power consumption was 490 units (Kwh) in 2004-05, one third compared with 1,500 units of China. Indias consumption stood at about 644 units in 2007-08 at an annual average growth of 10.47%. However, during the same period, Chinas consumption had grown at 12 to 13% per annum. The National Electricity Policy envisages Power for all by 2012 and the per capita availability of power to be increased to over 1,000 units, which indicates an average consumption growth of about 13.81% every year. It is easy to make such exciting projections, but very difficult to attain it, especially when the capacity addition targets of every five-year plan fall short of expectations. In this scenario, there is a need for increased private participation in the power sector to make India self-reliant in power.
This Pre-feasibility Report on Captive Power (5MW) provides information on the overall power scenario in the country, sectoral segmentation and structure of the industry, demand and supply of power, captive power scenario in India, need for captive power, growth drivers, steps involved in setting up a captive power plant, capital outlay, profitability and balance sheet analysis. The details include requirement of plant and machinery, tentative cost of project, project financing, revenue and profitability projection, IRR, important financial ratios and breakeven point of the project. Over the last decade and half, India Inc has established itself as a vibrant economy with growing domestic consumption coupled with huge export potential. Stable political environment, dependable democratic fabric of the country, strong legal system, huge talent pool and cost advantage have made India a reliable business partner of the global community, attracting good foreign investment. While the growth trend is set off, there is tremendous need for building the background infrastructural support system to sustain the trend. Power being one of the most crucial needs for industrial growth finds its priority and as a result the National Electricity Policy rightly envisages Power for all by 2012. To attain this target, a total capacity addition of about 100,000MW was projected for 10th and 11th plan period. Although there has been some hectic activity in capacity addition, the possibility of attaining the target looks remote. This increases the responsibility of each industry so as to become self-reliant in power, not only to ensure reduced operational expenses but also to contribute towards making the country self-sufficient in power. Captive Power refers to generation from a unit set up by industry for its exclusive consumption. The estimates on captive power capacity in the country vary with the Central Electricity Authority putting the figure at about 11600 MW while industry experts feel that it is much higher, close to 20000 MW. Industrial sector is one of the largest consumers of electrical energy in India. However, a number of industries are now increasingly relying on their own generation (captive and co generation) rather than on grid supply, primarily for the following reasons:
Non-availability of adequate grid supply
Poor quality and reliability of grid supply
High tariff as a result of heavy cross- subsidization
The State Governments and SEBs have been concerned about the growing importance of Captive Power Plants account of the following reasons:
Captive plants may have adverse impacts on the finances of the utility, such as:
Industrial load is the main source for cross-subsidizing revenue flows ,
Billing and collection is much more efficient for HT consumers,
SEBs ability to service escrow accounts for security packages is also reduced,
Non-optimal growth of the sector
Problems in grid management especially in case of states with surplus power Adverse environmental impacts arising from types of fuels used and from higher emissions per unit of production, as compared to large power plants.
Reliability of power supply from captive and cogen plants as a source of firm power while on the other hand the concern of the owners of captive and cogen plants stems from:
Non-remunerative tariff structure for surplus power produced by them No risk sharing in case of non availability of fuel, change in variable cost due to switching of fuel after entering into power purchase agreement (PPA), etc Inadequacies in wheeling and banking facilities High contract demand charges. High level of duties and taxes on sale of power High wheeling losses assumed for power to be sold to grid by captive or cogen plant
Need to devote time and energy to an activity, which is not their core business
Restrictions on the minimum amount of power to be wheeled If the captive power plant (CPP) fails, charges for back-up or stand by power from the grid are twice the normal rate for captive plants
No formal policy for purchase of co generated power (in most of the states)

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